Key Insights

• Significant control over NEXTDC by individual investors implies that the general public has more power to influence management and governance-related decisions

• A total of 25 investors have a majority stake in the company with 41% ownership

• Institutions own 43% of NEXTDC

Every investor in NEXTDC Limited (ASX:NXT) should be aware of the most powerful shareholder groups. We can see that individual investors own the lion's share in the company with 56% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

Meanwhile, institutions make up 43% of the company’s shareholders. Large companies usually have institutions as shareholders, and we usually see insiders owning shares in smaller companies.

In the chart below, we zoom in on the different ownership groups of NEXTDC.

View our latest analysis for NEXTDC

What Does The Institutional Ownership Tell Us About NEXTDC?

Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.

NEXTDC already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see NEXTDC's historic earnings and revenue below, but keep in mind there's always more to the story.

NEXTDC is not owned by hedge funds. Our data shows that BlackRock, Inc. is the largest shareholder with 5.8% of shares outstanding. Australian Super Pty Ltd is the second largest shareholder owning 5.1% of common stock, and The Vanguard Group, Inc. holds about 5.0% of the company stock.

Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.

While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.